1. Accounting Equation
Lecturer: Yang Bai

2. Accounting is the financial language and follow certain rules
Welcome
Accounting is the financial language and follow certain rules
Accounting equation is the fundamental rule and carrier for financial information.

3. Accounting equation is a great invention
Fra Luca Bartolomeo de Pacioli was an Italian mathematician, Franciscan friar, collaborator with Leonardo da Vinci, and a seminal contributor to the field now known as accounting.

4. Accounting Equation Assets = Liabilities + Owner’s Equity
The resources owned by a business and can bring future benefits
The rights of the creditors, which represent debts of the business
The rights of the owners

5. Assets = Liabilities + Owner’s Equity
Accounting equation
Assets = Liabilities Owner’s Equity

6. Analyzing transactions

7. Transaction a
a. Batman deposited 1 billion dollars in a bank account in the name of Wayne Enterprise.
Batman, Capital
+1,000,000,000 Invested by Batman
Cash
+1,000,000,000 a.
Assets
Owner’s Equity =

8. Transaction b
b. Wayne Enterprise exchanged 1 billion cash for a building.
Batman, Capital
1,000,000,000
Cash
-1,000,000,000
Assets
Owner’s Equity =
Building
+1,000,000,000

9. Transaction c
c. Wayne Enterprise signed a contract with ICBC borrowing 1 billion dollars.
Long-term Debt
+1,000,000,000 borrowed from ICBC
Cash
+1,000,000,000 a.
Assets
Liabilities =

10. Transaction d
d. Batman withdrew 1 billion dollars from Wayne Enterprise.
Batman, Capital
-1,000,000,000
Cash
Assets
Owner’s Equity =

11. See you next class